General partnership: what it is and how to set one up

Running a business with someone you trust? A general partnership can be a smart, flexible choice–especially when you're just getting started and want to split responsibilities, decisions, and profits fairly.

It’s not the most common business type today, but it still works well for professionals, small firms, and family ventures. Here’s what you need to know.

Summary

1. What is a general partnership?
2. Main features at a glance
3. When does a general partnership make sense?
4. How to set up a general partnership – in 4 steps
5. Pros and cons of a general partnership
6. Final thoughts

What is a general partnership?

In a general partnership (known as a sociedad colectiva in Spanish law), two or more people team up to run a business. All partners are equally involved and equally responsible – financially, legally, and operationally.

What makes this structure unique? The partners don’t just share the rewards – each of them is personally liable. That means if the business can’t meet its obligations, creditors could go after the personal assets of any partner.

That’s why trust and transparency matter a lot between partners.

Curious how a general partnership compares to other popular business structures? Find a full breakdown in our Complete guide to understanding the types of companies in Spain.

Main features at a glance

Financial features

• No minimum capital required: you don’t need a set amount of money to start. The capital you do bring in acts as financial backing and working capital.
• May improve access to finance: since partners are liable with their own assets, banks may be more willing to offer financing to these businesses.
• Pays corporate tax: in Spain, general partnerships pay Corporate Tax (Impuesto de Sociedades) at a flat rate (currently 25%), just like Limited Companies.

Tax and accounting

• One legal taxpayer: the partnership is taxed as a separate legal entity.
• Standard cost deductions allowed: business-related expenses can be deducted from the company’s taxable income.
• Must keep commercial accounts: just like any other business, general partnerships need to maintain formal accounts and submit annual financial statements.

Legal points

• Company name must include partners: either list all partners or include one name with the words “& Co.” You must add “General Partnership” or “S.C.” (“Sociedad Colectiva”).
• Formal registration required: a public deed signed before a notary is needed, and the business must be entered in the Mercantile Register.
• You need at least two partners: this model doesn’t work solo.
• Unlimited liability: all partners are personally responsible for the debts and commitments of the business. Future assets included.

When does a general partnership make sense?

This structure can work well when you trust each other, don’t need a large upfront investment, and plan to manage the business together.

Examples:

• Legal practices where partners collaborate closely
• Small consultancies or firms offering services to small businesses
• Professional partnerships in architecture, engineering, accountancy or healthcare
• Family shops or local businesses with shared input and responsibilities

For small teams or family businesses seeking extra flexibility and fewer administrative hurdles, discover the Communal partnership: a flexible choice for small businesses.

How to set up a general partnership – in 4 steps

Draft your partnership deed

This is your company’s founding document. It should include:

• Full names and addresses of each partner
• Chosen company name
• Each partner’s contribution (cash, assets, or services)
• Intended duration of the partnership
• Who handles which management tasks
• Any specific agreements between the partners

Register with the Mercantile Register

After you’ve signed the deed in front of a notary, register it with the Mercantile Register corresponding to your company's location.

Get your business tax number (NIF)

Request this number from the Spanish Tax Agency so you can start trading legally.

Publish officially in the BORME

The partnership becomes legally valid once it's published in Spain's official business register (Boletín Oficial del Registro Mercantil).

Pros and cons of a general partnership

Benefits

• Flexible setup: you choose who does what and how you operate
• Easier credit access: lenders see the extra security from unlimited liability
• Lower starting costs: less admin and fewer legal hurdles compared to other models
• Shared responsibility: everyone contributes and has decision-making power

Possible drawbacks

• Unlimited personal risk: each partner is financially exposed if things go wrong
• Dissolution if a partner leaves or dies: unless otherwise agreed, the company shuts down
• Adding or removing partners can be difficult: unanimous agreement is usually required
• Shared liability: one partner’s decisions or mistakes affect everyone

Thinking about a more formal or investor-focused business? Learn about the Public limited company (S.A.): is it the right fit for your business?

Final thoughts

A general partnership is a solid option when you value flexibility and mutual trust over complex legal shielding. It’s especially useful for professionals starting out, close-knit teams, or family ventures.

Want to compare legal and tax aspects of every company type? Don’t miss our Legal and tax aspects of different companies in Spain for a detailed comparison.

But there’s no sugar-coating it: unlimited liability is a serious commitment. So make sure you and your partners agree – not just on the vision, but on how you’ll back each other up if things get tough.

If you’re ready to build something together and want a lean, collaborative start – this could be the right model to get your business going.